Temasek Review 2022

From Our Chairman

A clear sense of purpose will guide us, even more so in unpredictable times.

Our world today is immensely complex. The challenges faced by governments, businesses and society have never been so multi-dimensional or far-reaching.

The pandemic has impacted many areas; among them health, the economy, politics, and living standards.

Today we face rising inflation, higher interest rates, a lower growth trajectory and a potentially recessionary environment in key developed markets, which brings heightened risks of stagflation. In developing markets, energy and food-related shortages as well as soaring prices are likely to result in increased hardship.

Amid an increasingly fractious geopolitical environment, the climate crisis looms, with the window for action rapidly narrowing year on year. More frequent extreme weather events, backed by indisputable data, paint a dire picture of what the world would look like if we do not urgently address this emergency.

While the future remains unpredictable, we recognise that there is tremendous scope to work together to overcome global challenges, and to harness the power of public and private sectors to achieve a better, more sustainable, and inclusive world.

Having a strong and clear purpose will enable boards and management teams to focus, and shape their strategies and tactics to achieve their missions.

As a firm, we believe in doing well as an Investor, doing right as an Institution, and doing good as a Steward. Our Purpose is embedded in everything we do and guides us towards achieving our long term goal of contributing to a bright future for current and future generations.

Portfolio Performance

It was an active year despite uncertainty in global markets. We invested S$61 billion and divested S$37 billion.

Net portfolio value
as at 31 March 2022

As at 31 March 2022, our net portfolio value was S$403 billion, up S$22 billion on the previous year. Our Singapore portfolio has performed well, as companies emerge from the drag of COVID-19 to capture new opportunities in a post-pandemic world.

for the year

One-year Total Shareholder Return (TSR) was 5.81%. Our longer term 10-year and 20-year TSRs were 7% and 8% respectively. TSR since inception in 1974 was 14%.

for the year

The resilience of our portfolio remains a core strength. We invested into opportunities that are aligned with long term structural trends, including in unlisted assets, and continued to shape our portfolio in line with these trends. We expect some companies to face growing pressures to transform technologically and address the impact of climate change on their businesses.

Net portfolio value
as at 31 March 2022

for the year

for the year

Staying United

The battle against COVID-19 is not over; we need to continue working together to overcome it.

We remain committed to doing our part to uplift communities where we can, as we have done since the earliest days. We continue to support COVID-19 initiatives in five key areas: testing & diagnosis, containment & contact tracing, care & treatment, protection & prevention, and enablement.

Our donations included masks, personal protective equipment, test kits and medical equipment.

Our staff worked selflessly and tirelessly with colleagues from Temasek Trust, Temasek Foundation (TF), and partners to support these COVID-19 initiatives in Singapore and overseas. They used their skills, knowledge, experience, and networks to deliver solutions that have made, and continue to make, a difference to their communities.

Our donations included masks, personal protective equipment, test kits and medical equipment.

In Singapore, we worked with TF on various efforts to enhance public resilience over the past two years. About 153 million disposable and reusable masks, more than 1 million oximeters, and over 900,000 bottles of mouth gargle were distributed to Singapore residents. To support the treatment of vulnerable seniors with respiratory issues, the Foundation worked with the Agency for Integrated Care to distribute around 680 medical-grade oxygen concentrators to community health providers.

To alleviate the strain on Singapore’s healthcare system due to the surge in cases from the Omicron variant, we worked with our portfolio companies and partners to transform four Singapore EXPO exhibition venue halls into COVID-19 treatment facilities. More than 2,500 beds were provided for patients who did not require acute care in hospitals.

Beyond Singapore, we provided COVID-related supplies to some 40 countries in and around the region, as well as further afield in Latin America and the Middle East. Our donations included masks, personal protective equipment, test kits and medical equipment.

The global economy is in a fragile state. Geopolitical tensions have intensified as a result of the Russia-Ukraine conflict, impacting global commodity prices and supply chains. As a result, central banks have tightened their monetary policies to curb the strong inflationary pressures. Heightened geopolitical uncertainties and tighter monetary policy, combined with expectations of slowing global growth from recent highs in 2021, leave the global economy more vulnerable and raises the risk of a recession in key developed markets.

In the US, the labour market remains tight and inflationary pressures continue to be strong. We expect the Fed to continue tightening monetary policy aggressively towards restrictive territory this year in order to anchor inflation expectations. Against this backdrop of tightening financial conditions, negative fiscal impulse and elevated geopolitical uncertainty, growth is therefore likely to slow meaningfully and below trend, raising the risks of a recession into 2023. A recession, if it occurs, will likely be relatively mild as healthy private sector balance sheets will provide a buffer.

Europe faces significant growth headwinds as the Russia-Ukraine conflict has posed multi-faceted risks such as lower disposable income due to higher energy and food prices. Supply cuts in natural gas, a crucial input in multiple sectors, have dampened overall confidence. We expect a meaningful slowdown in the economy in the second half of 2022. Despite the less constructive outlook, we think opportunities can be found in sectors supported by an acceleration in capital expenditures driven by green transition and energy independence priorities, which are interlinked.

China’s top leaders have set a growth target of around 5.5% for 2022. Given the weakness in growth so far this year, this may be increasingly challenging to achieve. However, policy agencies are likely to maintain a supportive stance to buffer headwinds from soft property activity and pandemic restrictions.

The pace of expansion for the Singapore economy may be slower than earlier projected. While Singapore’s reopening will facilitate a stronger recovery in domestically-oriented and travel-related sectors, the global backdrop has turned less supportive, with considerable uncertainty in outlook. We remain wary of downside risks, including an escalation of the war in Ukraine and its consequences, as well as a sharper than expected slowdown in China’s growth and heightened tensions in the US-China relationship. In addition, Singapore’s externally-oriented economy is particularly vulnerable to a recession in developed markets.

Preparing for the Future

We remain steadfast in our efforts to build a resilient and forward looking portfolio.

We continued to invest into opportunities that align with long term structural trends, and deployed capital to reposition our large Singapore portfolio companies for the post-COVID world. Meanwhile, we de-risked certain positions that faced major near term headwinds and realised gains from divestments based on our intrinsic value tests.

Our Artificial Intelligence (AI) and Blockchain pods are making good progress with their ventures. Together with DBS and J.P. Morgan, we founded Partior, a blockchain platform that enables real time, cross-border and multi-currency payments. Our global AI Centre of Excellence, Aicadium, is partnering some of our portfolio companies to develop and scale AI products to enable better commercial outcomes and catalyse new business opportunities.

We continued to engage our portfolio companies to prepare for the future, along with the opportunities and challenges it brings. During the year, we participated in Singapore Airlines’ mandatory convertible bond issue, enabling the airline to strengthen its balance sheet and to position it for the resumption of global travel; and in Olam’s rights issue as part of efforts to grow the company’s business unit, Olam Food Ingredients, for its anticipated spin-out as an independent entity.

We remain steadfast in our efforts to build a resilient and forward looking portfolio.

We took part in Sembcorp Marine’s rights issue, which strengthened its balance sheet and liquidity position, accelerating its strategic pivot to high-growth renewable and clean energy segments.

We are pleased that Keppel Corporation and Sembcorp Marine announced in April 2022 that they have entered into definitive agreements for the proposed combination of Keppel Offshore & Marine and Sembcorp Marine. We see this combination as essential to ensure the combined entity is well-positioned to capture opportunities arising from decarbonisation in the oil & gas sector and from the global energy transition towards renewables, especially against the strong and unabating headwinds the sector has faced over recent years.

Driving Sustainable and Inclusive Growth

Sustainability remains at our core. We need to act now to deliver a better, more inclusive and resilient future for all.

We target to halve the net emissions attributable to our portfolio by 2030 over 2010 levels, and have an ambition to achieve net zero by 2050. To drive progress, we actively engage with our portfolio companies. We have also redirected parts of our long term incentives towards our 10-year carbon reduction target.

Climate change presents opportunities to create value for long term sustainable growth in the shift to a greener economy. Temasek is actively investing in sustainable solutions in food, water, waste, energy, materials, clean transportation and the built environment, just to name a few.

Ultimately, a focus on sustainability and climate change is a journey we must take. It is inextricably linked to a multi-generational mindset, as we do our part for a more sustainable world that safeguards the future of humanity.

We need to act now to deliver a better, more inclusive and resilient future for all.

Defining Our Purpose

I started my message by talking about the importance of having purpose in an unpredictable environment. Indeed, defining Temasek’s purpose has been top of mind for our senior leaders.

Over the past year, our staff engaged in discussions on defining our organisation’s purpose to tap their understanding of our values, culture, and beliefs.

Our Purpose serves as a single, unifying pledge that encapsulates our reasons for being who we are, and why we do what we do.

After a year of in-depth and fruitful discussions, the Temasek team has collectively defined our Purpose in the simple statement, “So Every Generation Prospers”. This serves as a single, unifying pledge that encapsulates our reasons for being who we are, and why we do what we do.

Our Purpose serves as a single, unifying pledge that encapsulates our reasons for being who we are, and why we do what we do.

Long term generational commitment is fundamental to Temasek’s founding. Our predecessors had imbued a long term ownership mindset in everything they did. It is through their unwavering commitment that we can reap the fruits of their labour over the past decades. Similarly, we must carry forward this spirit of doing things today with tomorrow in mind.

As a provider of catalytic capital, Temasek finds its purpose in helping companies thrive and tackle the global challenges of our time. We will deploy financial capital to stimulate innovation and growth; invest in human capital to uplift capabilities and enhance potential; seed social capital to transform lives for a more inclusive and resilient world; and enable natural capital to foster healthy and productive ecosystems and sustainable solutions.

In Appreciation

While it has been a challenging year, I am proud of the incredible adaptability and strength of our Temasek staff. They kept a focus on our Purpose and mission as a firm, while also volunteering for the many pandemic relief projects, both in Singapore and around the world.

Our international and regional advisors, as always, have been generous with their insights and advice. I look forward to the resumption of our in-person meetings as travel restrictions ease.

It is my great pleasure to welcome Paul Polman, Co-Founder/Co-Chair of IMAGINE to the Temasek International Panel. As a global champion of sustainability, we look forward to tapping on his guidance and counsel in the coming years.

I also would like to thank my colleagues on the Board for their tireless and generous contributions during the year.

We were delighted to welcome Ajay Banga, Jenny Lee, Tan Chee Meng, and Jaime Augusto Zobel de Ayala who joined our Board during the year. We are already benefitting from their insightful views on global markets and diverse issues.

I would like to give special thanks to Robert Ng who retired from our Board on 1 October 2021 after seven years of service. We thank Robert for his contributions to our strategy and Board deliberations over the years. And of course, I again thank and recognise Ho Ching and Lee Theng Kiat who retired from their executive roles in October. We will continue to benefit from their insights and support as Chair of Temasek Trust and Temasek International, respectively.

The road ahead may look winding and the complexities facing us may seem insurmountable. However, I am confident that we will rise to the challenge, knowing that a difficult environment brings out the very best in us, and by staying committed to doing well, doing right and always doing good as a firm, so every generation prospers.

Sign Lim Boon Heng



July 2022